Financial Services Regulation and Compliance - Insurance June 2020
DOMESTIC
CBI publishes Guidance for Retail Intermediaries on the Requirement to hold Professional Indemnity Insurance Cover
On 10 June 2020, the Central Bank of Ireland (CBI) published guidance on the base amounts of Professional Indemnity Insurance (PII) cover applicable to insurance and reinsurance intermediaries in light of Commission Delegated Regulation 2019/1935. From 12 June 2020, the minimum PII levels required to be held by insurance, reinsurance and ancillary intermediaries registered under the European Union (Insurance Distributions) Regulations, 2018 are €1,300,380 per claim and €1,924,560 aggregate cover per annum.
CBI launches CP131 on Regulations for pre-emptive recovery planning for (re)insurers
On 25 June 2020, the CBI published a consultation paper on proposals to introduce formal recovery planning requirements for (re)insurers under Section 48(1) of the Central Bank (Supervision and Enforcement) Act 2013. The proposed Regulations will apply to all (re)insurers authorised by the CBI and will require (re)insurers to prepare, maintain, review and update as required, a pre-emptive recovery plan in the event of the (re)insurer suffering a signification deterioration in its financial situation. The closing date for submissions is 30 October 2020.
EUROPEAN
EIOPA publishes monthly technical information
On 4 June 2020, EIOPA published technical information on the symmetric adjustment of the equity capital charge and risk free interest rate term structures for Solvency II purposes with reference to the end of May 2020 in both cases. It also updated the representative portfolios that will be used for calculation of the volatility adjustments to the relevant risk-free interest rate term structures for Solvency II.
EIOPA supports the ESRB’s call on enhanced monitoring of liquidity risks in the insurance sector
On 9 June 2020, EIOPA published a statement supporting the views expressed by the European Systemic Risk Board (ESRB) on the importance of improving the monitoring of liquidity risks in the insurance sector with the aim to enhance Europe’s preparedness to potential future shocks.
EIOPA consults on (re)insurance value chain and new business models arising from digitalisation
On 10 June 2020, EIOPA launched a public consultation on a ‘Discussion paper on (re)insurance value chain and new business models arising from digitalisation’. The goal of the consultation is to get a better picture of new conduct and prudential risks, legal and compliance issues created by digitalisation and the possibility of enhanced outsourcing creating a fragmentation of the European Union’s insurance value chain, in order to plan for next steps. The deadline for feedback submissions is 7 September 2020.
EIOPA responds to the European Commission’s consultation on the revision of the Non-Financial Reporting Directive
On 11 June 2020, EIOPA responded to the European Commission’s consultation on revising the Non-Financial Reporting Directive (NFDR) by welcoming the initiative to revise the NFRD. Along with its response, EIOPA submitted a joint letter with the European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) highlighting certain topics which are of particular importance for Europe’s future non-financial reporting regime. These include the need to introduce disclosure standards or implementing technical standards as mandatory; to designate the development of those standards to a public body; to expand the scope of companies to be covered and the importance of consistency with other legislation.
EIOPA publishes Annual Report and Report on Supervisory Activities for 2019
On 15 and 17 June 2020 respectively, EIOPA published its Annual Report and its Report on Supervisory Activities for 2019, both setting out its activities and achievements of the past year. In 2019, EIOPA strengthened its work on conduct of business supervision and market monitoring activities, including the use of big data in the motor and health insurance markets and consumer protection issues in travel insurance. Another key area of work in 2019 focused on proposing amendments to Solvency II in the context of the 2020 Review of Solvency II. Both reports can be viewed in full on EIOPA's website.
EIOPA publishes findings of the Regular Supervisory Report Peer Review
On 18 June 2020, EIOPA published the findings of its peer review of the Regular Supervisory Report (RSR). The review analysed how and the extent to which the proportionate approach set out under Delegated Regulation 2015/35 has been implemented among national competent authorities (NCAs) and also aimed to determine if further convergence is needed on the frequency of submission of RSRs. EIOPA provided a number of recommended actions that NCAs should take to bring about greater harmonisation in their approaches and more consistency in implementing the principle of proportionality including but not limited to changing the frequency of submission of RSR's. It is expected that NCAs will have implemented EIOPA's recommended actions addressing supervisory shortcomings by 2022.
EIOPA publishes bi-weekly information for Relevant Risk Free Interest Rate Term Structures and Symmetric Adjustment to Equity Risk
On 19 June 2020, EIOPA published technical information on the symmetric adjustment to equity risk (EDA) and RFR with reference to 16 June 2020. The information can be found in the extraordinary weekly update sections on the EIOPA website for both EDA and RFR.
EIOPA publishes second Discussion Paper on Methodological Principles of Insurance Stress Testing
On 24 June 2020, EIOPA published its second Discussion Paper on Methodological Principles of Insurance Stress Testing (the Discussion Paper) which follows the first discussion paper published in December 2019. The Discussion Paper addresses the following topics: Stress test framework on climate change; approach to liquidity stress testing; and multi-period framework for the bottom-up insurance stress testing. The Discussion Paper is open for comments from stakeholders until 2 October 2020.
For more information on these topics please contact any member of A&L Goodbody's Insurance & Reinsurance team.
Date published: 8 July 2020